The Major League Baseball collective bargaining agreement expires on December 1, 2021. ESPN’s own Jeff Passan reported that leaders from MLB and the MLBPA met on Tuesday, April 18 for the first official negotiating session.[i] There is a concern baseball could face its first work stoppage since the 1994/95 season. Over recent years relations between the league and the players association have become increasingly combative over many different issues. Although the two sides have struggled to work together, the industry has remained roughly a $10 billion-a-year industry. Labor disputes could drastically diminish that number.
A key topic in these negotiations will be what is referred to in baseball as “service time manipulation.” Service time manipulation is when teams orchestrate reasons to keep their high level prospects in the minor leagues just long enough so that a prospect will not earn a full year of MLB service time in their rookie season.[ii] Service time is the “clock” for players when it comes to earning higher salaries through arbitration and free agency.[iii] One of the game’s biggest stars, Vlad Guerrero Jr., faced this issue in 2018. The consensus number one prospect put up a slash line of .402/.449/.671 in AA, but was criticized for his defense, which was the “reason” the Blue Jays kept him in the minors.[iv]
For arbitration, players have their salaries determined by a third party arbiter between three and six years of service time, and players become free agents after six years of service time.[v] In order to accrue a full year of service time, a player must be on the 26-man roster or injured list for at least 172 out of 187 days in the season.[vi] Simply put, a team can delay arbitration and free agency for a player by a full year by keeping them in the minors for 16 days during a season.
Last week, MLB made a proposal to the MLBPA to alter the service time structure. The proposal offered to make players eligible for free agency at 29.5 years old, and involved a pool of roughly $1 billion (tied to revenues) to be dispersed in an unspecified manner to replace the current arbitration system.[vii] Under an age based system there would be no incentive for teams to hold top prospects in the minors. This proposal would also benefit some top MLB players who are at their physical peaks and would allow them to hit the free agent market sooner than under the current structure. With that being said it would likely do more harm than good. The sports top stars tend to reach the big leagues in their early 20’s and this proposal would likely keep them from the free agent market longer than the current structure does, and in turn depress the earning potential for some of the games stars.[viii] The idea around setting an age for free agency could eliminate service time manipulation, but it is yet to be seen what number will universally benefit the players.
Revamping arbitration could be of sound benefit to the players. It is estimated that arbitration-eligible players earned approximately $650 million this off-season, so the $1 billion pool would be a substantial increase.[ix] Although the number is substantially higher, it is unclear how the money would be distributed or how arbitration eligibility would be determined without service time considerations. The MLBPA was not receptive to this initial proposal, but eliminating service time manipulation will remain a priority for them as the December 1 deadline gets closer.
These are the early stages of formal bargaining between the two sides. This proposal was the first from the league and assuredly not one they expected to immediately resolve service time issues. The full terms of these offers are not public information, but we should see increasing details over the coming weeks and months.